Lack of profit, a poor local economy, nonpayment of premiums and outright fraud are some of the red flags that may signal a title agency teetering on the edge of closure, a Missouri Department of Insurance forum concluded yesterday.

The forum, held in Jefferson City, Mo., was held in the wake of the closing of four Missouri title agencies in the six months. Notably, Capital Title of St. Louis, which had 13 offices in the area and handled about 8 percent of local house closings, shut down in January, and St. Charles, Mo.-based Phoenix Title closed in April with at least $1 million missing.

"The department hoped by scheduling this forum to get an idea about red flags that are out there so we can head off future agency closings," said Matthew Barton, spokesman for the insurance department.

"Whenever an agency goes down it leaves a lot of unanswered questions, individuals who have escrowed money or bought title insurance who have questions as to where their money is or they have questions about the title of the property they are going to buy," Barton said.

Two of Missouri's biggest title companies, Chicago Title and Fidelity National, as well as First American Title, Stewart Title, Old Republic Title and 15 other title insurers, attended the forum, Barton said. About 50 industry representatives total showed up, he said.

Title insurance companies are under intense scrutiny nationwide. A scandal was sparked by Colorado's insurance commission's investigation of title insurers, including First American Title Co., Land America and Fidelity Title. In that investigation, First American agreed to refund about $24 million to consumers nationwide without admitting liability or wrongdoing.

Though fraud does sometimes figure into title agencies going out of business, kickbacks weren't discussed at the Missouri forum.

" We wanted to figure out what steps can be taken to try to avoid agency closings and the frustration these closings have brought to consumers," Barton said.

One important way to help ward off closings is "to make sure someone's watching over escrow accounts," Barton said. "Audits are expensive. We're going to have to find the right mix of regulations on those agencies but still allowing them to effectively do business and do the job they want to do with regard to potential home buyers."

Timely reporting from the agency to the underwriter of the policies is also an issue, Barton said. There is lag time in reporting these policies, Barton said, for many reasons. "Agencies get a very high volume of policies," he acknowledged, slowing down reporting time, but timely reporting is still important.

Other areas that were mentioned included three-way reconciliations, nonpayment of premiums, and lack of profit in years past, "or, more specifically, a previous year," Barton said.

The economy in St. Louis has also played a part in the problem, Barton said, as has outright fraud.

"Outright fraud could entail a number of things. A number of those discussed could be commingling of money between escrow accounts and operating accounts. When there are lean times of year, on occasion there has been some dipping into these escrow funds to pay the agency's bills to keep the agency afloat during the leaner times," Barton said.

When Capital Title shut down in January, the closings of dozens of home sales were left in limbo, with home buyers unable to complete their transactions and an undetermined amount of money held in escrow by the company was left unaccounted for. The insurance department is hoping to learn how to ward off such problems in the future.